How to Make a Million Dollars While Eating Lunch

25052010

Source:http://millionairemommynextdoor.com/2009/08/how-to-make-a-million-dollars-while-eating-lunch/In response to my last post, Would You Ditch A Car For $1,000,000?, a reader made the comment: “As a grad student in an urban area, I don’t have a car (nor could I afford one) and I use public transit. … I wish there was a “big ticket” item like that that I could easily cut out of my life, but there just isn’t. Instead I try to cut back on small things and aggressively invest for cashflow.”

While savings do accumulate faster when you cut back on the biggest budget-buster categories (housing, transportation, insurance and taxes), the little things do add up. Take for instance:

Yield: An additional $1,000,837 * Add a group of supportive friends for lunch to work on the Baby Steps to Financial Freedom together. Yield: Financial freedom – with friends who will have the resources to enjoy it with you!

Isn’t it amazing how much money you can amass by investing small amounts over long periods of time?

Once you think in terms of investing instead of spending, look for ways to duplicate this process in other ways. Consider the following actions:

*

buy staples in bulk and invest your savings *

invest your employee bonuses *

invest unexpected financial gifts and inheritances *

invest your tax refunds *

buy a term life insurance policy instead of a whole life one and invest your monthly premium savings *

buy a used car instead of new and invest the difference in price *

borrow books, movies and music from your local public library and invest your savings * save and invest your pocket change

Imagine this: Starting with $0 and depositing $5,000 annually in a Roth IRA account over 41 years (at a 10%* annual rate of return compounded monthly), you will have $3,081,554.

Choose affordable and cost-effective options and rather than feel deprived, feel excited that you get to invest the difference in yourself and your future.

~ Bon Appetit!

ooOOOoo

*The actual rate of return is largely dependent on the type of investments you select. From January 1970 to December 2008, the average annual compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 9.7% (source: http://www.standardandpoors.com).

Total savings are calculated in actual dollars (not inflation-adjusted). A common measure of inflation in the U.S. is the Consumer Price Index (CPI), which has a long-term average of 3.1% annually, from 1925 through 2008.